10-year Treasury yield falls below 5% as AI fears trigger tech rout

Benchmark bond yield dips beneath 5% for the first time in a month; oil climbs above $100 a barrel amid geopolitical tensions

By LineZotpaper

Published23 October 2026

Read Time2 min

The yield on the benchmark 10-year US Treasury note dropped below 5% this week for the first time in a month, as a sell-off in technology stocks driven by artificial intelligence concerns drove a flight to safe-haven assets. The move was compounded by weakness in French sovereign debt markets and by rising oil prices that tested $100 a barrel after fresh Houthi attacks on Saudi oil installations. The Federal Reserve's next rate decision is now in focus.

The 10-year US Treasury yield fell back below 5% on Thursday and held there on Friday, as investors fled technology stocks amid growing fears over the debt companies are taking on to build out artificial intelligence infrastructure. The yield on the 10-year note, which serves as a benchmark for mortgages, auto loans and credit cards, rose 4 basis points on Friday to 4.997%. The 2-year yield, more closely tied to Federal Reserve policy, gained 5 basis points to 4.692%, while the 30-year yield, sensitive to geopolitical developments, rose 3 basis points to 5.31%.

“The selloff in tech stocks drove the flight-to-quality bid, compounded by continued weakness in the French sovereign market,” BMO’s credit strategy team said in a note. “Interestingly, the focus on weakness in the equity market … overshadowed the move in the energy market, with Treasuries rallying despite WTI crude oil testing $100/bbl.”

West Texas Intermediate crude advanced 1.16% to $100.61 a barrel, and Brent crude traded 0.79% higher at $114.06. Energy prices have been climbing after fresh attacks by Iran-backed Houthi militants on Saudi Arabian oil installations, adding to supply concerns. Reports suggest the US and Israel could resume strikes against Iran after the midterm elections on November 3.

With the Federal Reserve’s rate decision due next week, traders will now turn to Friday’s flash S&P Global Purchasing Managers’ Index readings for a fresh view on US growth and inflation. Rising energy costs continue to weigh on inflation expectations, complicating the central bank’s path.

Analysis

Why This Matters

The 10-year Treasury yield is a key benchmark for consumer borrowing costs; its drop below 5% signals a shift in risk appetite.
The tech sell-off raises questions about the sustainability of the massive debt being taken on to finance AI networks.
Rising oil prices threaten to reignite inflation, influencing the Federal Reserve’s policy decisions.

Background

The 10-year Treasury yield had remained above 5% in recent weeks amid strong economic data and rising inflation expectations. This week’s reversal reflects a flight to quality as investors rotate out of equities perceived as overvalued or risky. The move was amplified by weakness in French sovereign debt markets and by new supply fears after Houthi attacks on Saudi oil installations.

Key Perspectives

[Investors in tech stocks]: Their sell-off, driven by AI concerns, triggered a flight to quality that pushed Treasury yields lower.

[BMO credit strategy team]: The sell-off was compounded by weakness in French sovereign debt and overshadowed moves in the energy market, with Treasuries rallying even as oil tested $100 a barrel.

[Critics of AI spending]: The widening credit default swap spreads on tech companies signal growing unease about the scale of borrowing for AI infrastructure.

What to Watch

The Federal Reserve’s interest rate decision next week and how PMI readings affect it.
Whether crude oil prices sustain above $100 and if further Iran-related military action disrupts supply.
The trajectory of credit default swap spreads on tech companies; further widening would indicate deepening stress in the sector.

Sources

10-year Treasury yield drops back to 5% this week as investors seek cover from AI worries · US Top News and Analysis

Checked

12 claims in this story checked against 1 source: 9 supported.

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SupportedThe 10-year Treasury yield fell below 5% as AI fears drove a sell-off in technology stocks.US Top News and Analysis: “Investors ran for cover this week as artificial intelligence fears hit stocks, driving the 10-year Treasury below 5%.”
SupportedThe 10-year yield fell below 5% for the first time in a month.US Top News and Analysis: “after falling beneath that level Thursday for the first time in a month”
SupportedOil climbed above $100 a barrel amid geopolitical tensions.US Top News and Analysis: “West Texas Intermediate futures for December delivery advanced 1.16% to $100.61 a barrel on Friday, while Brent crude, the international oil benchmark, traded 0.79% higher, at at $114.06 a barrel. Firmer energy prices come as fresh attacks by Iran-backed Houthi militants”
Partly supportedThe yield move was compounded by weakness in French sovereign debt markets and by rising oil prices.US Top News and Analysis: “The selloff in tech stocks drove the flight-to-quality bid, compounded by continued weakness in the French sovereign market”
SupportedBMO’s credit strategy team said, “The selloff in tech stocks drove the flight-to-quality bid, compounded by continued weakness in the French sovereign market.”US Top News and Analysis: “"The selloff in tech stocks drove the flight-to-quality bid, compounded by continued weakness in the French sovereign market," BMO's credit strategy team said in a note Friday.”
Partly supportedBMO’s credit strategy team said, “Interestingly, the focus on weakness in the equity market … overshadowed the move in the energy market, with Treasuries rallying despite WTI crude oil testing $100/bbl.”US Top News and Analysis: “"Interestingly, the focus on weakness in the equity market ... [has] overshadowed the move in the energy market, with Treasuries rallying despite WTI crude oil testing $100/bbl."”
SupportedThe 10-year yield rose 4 basis points on Friday to 4.997%.US Top News and Analysis: “On Friday, yields on 10-year U.S. Treasurys — used to price mortgages, auto loans and credit card debt — rose by 4 basis points to 4.997%.”
SupportedWTI crude advanced 1.16% to $100.61 a barrel.US Top News and Analysis: “West Texas Intermediate futures for December delivery advanced 1.16% to $100.61 a barrel on Friday”
SupportedBrent crude traded 0.79% higher at $114.06 a barrel.US Top News and Analysis: “Brent crude, the international oil benchmark, traded 0.79% higher, at at $114.06 a barrel.”
SupportedFresh attacks by Iran-backed Houthi militants on Saudi Arabian oil installations added to supply concerns.US Top News and Analysis: “Firmer energy prices come as fresh attacks by Iran-backed Houthi militants against Saudi Arabian oil installations drove new fears over an oil supply squeeze.”
SupportedReports suggested the US and Israel could resume strikes against Iran after the November 3 midterm elections.US Top News and Analysis: “Reports earlier this week suggested that the U.S. and Israel could resume strikes against Iran following the midterm elections on Nov. 3.”
Partly supportedRising energy costs continue to weigh on inflation expectations.US Top News and Analysis: “Rising energy costs continue to weigh on inflation concerns.”